Capital Gains Tax-Canada

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In Canada

  • Only half of a capital gain is taxed, and this is at your marginal rate in the year the gain is realized.
  • Capital losses can only be offset against capital gains – not other income.
  • There is no annual or indexing allowance.
  • Capital gains on personal homes are not subject to tax, but each family unit is only allowed to claim one home as its principal residence at a time.

Moving from UK to Canada

  • For Canadian income tax purposes, all the capital property (real estate, stocks, etc.) that you hold anywhere in the world at the time of landing should be valued (by yourself, but with evidence to back it up).
  • You should have records indicating the fair market value of your capital assets as of your date of landing in Canada and becoming a resident of Canada for tax purposes.
  • Keep such records safe for future tax purposes.
  • If you dispose of capital property when you are a tax resident of Canada, you will generate a profit or loss from the disposition (the selling price after closing costs minus the fair market value as of the date on which you became a tax resident of Canada).
  • This profit or loss will have to be reported in your Canadian income tax return.
  • This is true whether or not you bring to Canada the proceeds of the sale of your capital property.
  • For example, if you sell your house in the UK while you're a tax resident of Canada and if you keep the proceeds of the sale in a UK bank account, you still have to report the capital gain or loss on your Canadian income tax return.
  • There is more detailed information on this topic in the BE Wiki article entitled Tax and House Sales.

Leaving Canada

  • If you permanently leave Canada you are deemed to have disposed of all your capital assets at their fair market value. Any resulting capital gain is taxable in Canada.
  • There are a number of exemptions and elections. If you apply and file these correctly the tax on most assets, except marketable securities, can be avoided or deferred. The most important exemption for most expats is that any gain on their principal private residence up to the date they leave Canada is not taxable.
  • If you have been tax resident in Canada for 60 months or less the gain on any assets you owned before you became resident, and still own when you leave, is also exempt from tax.
  • Anyone with substantial assets should be sure to consult an accountant.

Adding this post by JonboyE - our resident tax and accounting guru

Question: Sold my house in UK in Nov 2015 and urgently need advice on CGT and how to report it in my Canada tax return.

Answer: You need to complete schedule three, section 4. Real estate.

  • Put the address where requested. Column 1 is year acquired. This is the year you moved to Canada.
  • Column 2 is proceeds of disposition. This is the sale price converted at the rate on the day of sale.
  • Column 3 is the adjusted cost base. This is the market value of the home of the day you moved to Canada converted at the exchange rate on that day.
  • Column 4 is for the estate agent and lawyer's fees converted at the rate on the day of sale.
  • Column 5 is your capital gain: column 2 less columns 3 and 4.
  • Carry this down to the bottom of the schedule and divide by 2. The product goes on line 127 of your tax return.

See more and how to claim CGT paid in the UK here: